A-Z Popular Blog Economics Search »
Related Guides
Moral Hazard

Related Topics
Economic Problems

Economic Problems

11 Examples of Foreign Direct Investment

 , updated on
Foreign direct investment is an investment by a firm from one country in a business that it controls in another country. This can be contrasted with an investment in stocks by foreign investors whereby the investor doesn't exert significant control over the business. The following are illustrative examples of foreign direct investment.

Mergers & Acquisitions

A large Germany cookie company acquires a smaller Italian cookie company for cash. The amount of cash transferred for the acquisition can be viewed as a foreign direct investment from Germany to Italy.


An American technology company builds and operates a data center in Canada. This is a foreign direct investment from America to Canada.


A Canadian sporting goods manufacturer builds a factory in Thailand.

Sales Office

A French software company opens a sales office in Brazil to reach the Brazilian market with their services.


A Japanese fashion brand opens a retail location in London.


A Czech furniture company opens a warehouse in Rotterdam.


An American electronics manufacturer opens a satellite office in China to procure parts and manage suppliers.


An American bank opens a customer service center in India to serve American customers.


Horizontal foreign direct investment occurs when a firm replicates its entire organization in multiple countries. For example, a Japanese ecommerce company that builds out an American ecommerce company with administration, sourcing, logistics and data centers all based in America.

Joint Venture

A German and Japanese train company form a joint venture to assemble high speed trains in Japan. The German portion of this investment can be viewed as foreign direct investment from Germany to Japan.

Research & Development

An Dutch information technology company opens a research and development center in India.

Foreign Investment vs Foreign Direct Investment

The difference between foreign investment and foreign direct investment is that direct investors control the management of the organization accepting the investment. This can be partial control but must be significant control. For example, an investor who buys 10% of a company does not "control" it simply by voting with their shares. However, a firm with a 10% interest in a joint venture might control it by placing their own management teams in the firm.


Foreign direct investment is an investment by a company or individual in one country in the business interests of another country. This only applies to investments that create ownership or control.


Generally speaking, nations welcome and encourage foreign direct investment because it creates jobs and tax revenue.
Overview: Foreign Direct Investment
An investment by a firm from one country in a business that it controls in another country.
Related Concepts
Next: International Economics
More about international economics:
Economic Institutions
Economic Relations
Economic Security
Foreign Direct Investment
Gains From Trade
Global Business
Global Issues
Grey Market
International Trade
Value Chain
World Economy
More ...
If you enjoyed this page, please consider bookmarking Simplicable.

International Economics

An overview of the topics covered by international economics.

Economic Change

The definition of economic change with examples.

Traditional Economy

A complete overview of traditional economies with examples.

Developed Country

The definition of a developed country with an overview of common characteristics.

International Trade

A complete overview of international trade with examples.


The definition of import with examples.

Grey Market

The definition of grey market with examples.


The definition of commodification with examples.


The definition of industrialization with examples.

Keynesian Beauty Contest

An overview of a Keynesian beauty contest, an investing theory.

Efficient Market Hypothesis

An overview of the Efficient Market Hypothesis.

Sticky Prices

Prices that stick to an established range and resist changing economic forces such as inflation.

Random Walk

An overview of random walk, an investing theory.


A definition of markets with examples.

Market Conditions

The common types of market conditions.

Wealth Definition

The definition of wealth with examples.

Capital Examples

The basic types of capital with examples of each.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map